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madreJ [45]
3 years ago
14

An asset used in a four-year project falls in the five-year MACRS class for tax purposes The asset has an acquisition cost of $5

,100,000 and will be sold for $1,600,000 at the end of the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? Refer to Table 10.7 (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Business
1 answer:
zalisa [80]3 years ago
4 0

Answer:

$1,449,068.80

Explanation:

Book value on purchase                    $5,100,000

Less: Accumulated depreciation       $4,218,720

(5,100,000*(0.2+0.32+0.192+0.1152) <u>                     </u>

Book value on sales                            <u>$881,280</u>

<u />

Salvage value of paint   $1,600,000

Book value of as set      <u>$881,280   </u>

Gain on disposal            <u>$718,720</u>

Tax on gain on disposal = $718,720 * 21% = $150,931.20

After tax cash flow = $1,600,000 - $150,931.20

After tax cash flow = $1,449,068.80

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Answer:

The correct answer is Gain or loss on the sale of equipment as part of continuing operations.

Explanation:

If a gross profit on sales is generated in the process of selling an item of property, plant and equipment, but additional expenses are also incurred, the only thing that is recognized in the income statement is the net profit.

Among the accounts of the income statement, only one record is made with the net profit that occurred in the process of the sale of the asset. Although the final effect on the income statement is the same as it had under the old regulatory framework, it can be said that with that single record among the income statements, what is sought is that high gross income and expenses are not shown high, as this could distort the different financial analyzes that will be carried out at the end of the year.

6 0
3 years ago
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Explanation:

8 0
3 years ago
True or false: No gain or loss is reported when treasury stock is reissued because GAAP does not consider transactions between a
Likurg_2 [28]

Answer:

The statement is:  True.

Explanation:

When a firm purchases its own shares they become part of the company's treasury stock. This usually happens when the organization intends to sell those shares in the future. According to the General Accepted Accounting Principles (<em>GAAP</em>), the transactions between a firm and its owners are not considered as profit-making. Thus, when a company reissues the treasury stock shares no revenues or losses are recorded.

6 0
3 years ago
Fierce is a product of the Ferris Company. Ferris's sales forecast for Fierce is 1,150 units, and they currently have 186 units
AURORKA [14]

Answer:

1,079 units

Explanation:

Fierce company forecast sales = 1150 units

Let this 1150 units be = 100%

Chester wanting to make a surplus of 10% means the total production will be = 110%

So, lets consider 1150 units as 100%

Then, 110% will be = (1150 units/100)*110 = 1265. So, Fierce fulfillment before Adjustment is 1,265 units

Fierce fulfillment after adjustment = 1,265 units - 186 units = 1,079 units

So, Fierce's Fulfillment after adjustment have to be 1,079 units in order to have a 10% reserve of units available for sale.

7 0
3 years ago
On December 1, Miser Corporation exchanged 6,000 shares of its $25 par value common stock held in treasury for a parcel of land
Bond [772]

Answer:

Capitalized value $582.000.

Explanation:

Step 1. Given information.

  • The common share of Miser had a fair value of $50 per share.

Step 2. Formulas needed to solve the exercise.

  • Fair value of shares = Price per share * (Amount by selling scrap -        exchanged shares)
  • Capitalized value = fair value of shares - value of scrap.

Step 3. Calculation.

Fair value of shares = $50 * (18.000 - 6.000) = $600.000

<em />

<em>Land should be capitalized by fair market value of share exchanged less any recovery of scrap as land will be developed for future plant.  </em>

Step 4. Solution.

<em />

Fair value of shares = $50*12.000 = $600.000  

Less: value of scrap = $18.000  .

Capitalized value = $600.000   - $18.000 = $582.000.

4 0
3 years ago
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